Thursday, 10 August 2017
Excise Tariff Amendment (Tobacco Duty Harmonisation) Bill 2017, Customs Tariff Amendment (Tobacco Duty Harmonisation) Bill 2017; Second Reading
These bills, the Excise Tariff Amendment (Tobacco Duty Harmonisation) Bill 2017 and the Customs Tariff Amendment (Tobacco Duty Harmonisation) Bill 2017, will ensure that tobacco products in cigarette form and other tobacco products receive a comparable duty treatment. In effect, this means that roll-your-own tobacco will no longer receive a more favourable tax treatment than tailored cigarettes. Four annual adjustments to the duty rate from 1 September 2017 will result in roll-your-own tobacco attracting the same rate of duty per kilogram as tailored cigarettes. The change is a logical next step from Labor's previous tobacco excise measures and therefore we support it. Labor has always taken the initiative in measures to reduce smoking.
This measure will result in a gain to the excise and excise-equivalent receipts over the forward estimates period of some $360 million. GST receipts from this measure are estimated to increase by $75 million over the same period, and these increases are in addition to the increase in the excise of all products in the 2016-17 budget. The increase from revenue will be available to help reduce the budget deficit, which, as we all know, continues to blow out under the government.
Labor welcomes the revenue increases but not the unfair budget measures imposed by the Abbott-Turnbull government in pursuit of their warped economic priorities. The government has a long way to go when it comes to fair budget repair. The government has given priority to tax cuts for millionaires, multinationals and companies, which increases taxes for ordinary Australians. These bills are essentially a public health measure, not a revenue measure. But these bills are necessary.
The Australian Institute of Health and Welfare National Drug Strategy Household Survey for 2016, released on I June this year, found that the use of roll-your-own cigarettes rose from some 26 per cent of smokers in 2007 to 36 per cent in 2016, and that, from 2013 to 2016, the use of roll-your-own cigarettes amongst smokers in their 30s rose from 29 per cent to 37 per cent. The lower cost of roll-your-own tobacco because of the more favourable tax treatment is believed to have contributed to these increases. Aligning the tax treatment of tailor-made cigarettes and roll-your-own tobacco removes the price incentive to buy roll-your-own tobacco. It is a sensible measure that should halt the increase in the use of this particular tobacco. Ideally, it ought to reverse it.
Despite numerous challenges, the World Trade Organization has upheld Australia's right to impose various measures that were introduced by the previous Labour government to reduce the level of smoking in this country. Last month the tobacco manufacturer Philip Morris was ordered to pay a reported $50 million in legal fees to Australia after losing its international court bid to scrap plain packaging. Many other countries have since followed Australia's lead. France, Hungary, Ireland, New Zealand, Norway, Slovenia and the United Kingdom now have plain-packaging laws. Similar laws are planned in Canada, Turkey, Singapore and South Africa.
Under Labor, Australia introduced many other measures aimed at cutting cigarette smoking. The excise on tobacco products was increased by 25 per cent in the 2010-11 budget. Restrictions were imposed on internet advertising. There was $102 million allocated to nicotine replacement therapies and other quit-smoking supports through the Pharmaceutical Benefits Scheme. There was $100 million invested in the COAG National Partnership Agreement on Closing the Gap in Indigenous Health Outcomes, to tackle smoking rates in Indigenous communities. There was $14.5 million invested in the Indigenous Tobacco Control Initiative over three years from 2008. There was $5 million allocated in one-off funding for Quitlines in 2009-10. In November 2015 Labor announced that, if re-elected, we would deliver a further four excise-rate increases of 12.4 per cent, beginning on 1 July 2017. So I am not surprised that Labor's initiatives have been followed by the government. The 2016-17 budget announced annual increases in tobacco excise and excise-equivalent duties of 12.5 per cent from 2017 through to 2020.
The National Drug Strategy Household Survey, which I have already cited, shows that Labor's leadership in cutting smoking rates has achieved results. The survey found the proportion of Australians who have never smoked rose from 60 per cent in 2013 to 62 per cent in 2016. Most encouragingly, 98 per cent of Australian teenagers have never smoked. That is up from 95 per cent in 2013. Amongst younger people who do smoke, the age at which they smoked their first cigarette is rising. In 1995 it was 14.2 years. By 2013 it was 15.9 years. Then it jumped significantly, to 16.3 years, in 2016. However, the National Drug Strategy Household Survey also contains some rather alarming statistics. Smoking kills 15,000 Australians a year. One in eight adults still smokes daily. Smoking rates are highest amongst Indigenous Australians and amongst people with mental illness. These figures show the urgency of the bills that we are now considering.
Improving the health outcomes for Australians requires a little bit more than just harmonising tobacco taxes. You would hope that the government would do more than just follow in Labor's lead on raising tobacco excise. We urge the government to do the same by committing to the new national media campaign on smoking, as we, of course, suggested in the last election. The government mothballed the Australian National Tobacco Campaign in 2013. The campaign, familiar to people as the 'every cigarette is doing you damage' ads, had existed since 1997. It was hailed and copied by other countries because of its effectiveness. The National Drug Strategy Household Survey has also revealed the effects of the government's lack of commitment to a media campaign against smoking. Total levels dropped from 12.8 per cent in 2013 to 12.2 per cent in 2016. For the first time in two decades a statistically significant fall was not recorded.
Labor will continue to lead the way on measures to reduce smoking rates. Our record demonstrates our commitment. We will continue to hold the government to account in improving health outcomes for all Australians and in, at the same time, delivering a fairer budget for all Australians.
The government is bleeding smokers dry. Once the government is finished, do you think it will stop? I don't. I think it will then tax the next most vulnerable group of Australians. To those listening, let me say this: it could be you. If you want to stop the ravenous tax man before he bleeds you and your family dry, you have to vote for the Liberal Democrats. The bill before us today will be waived through the parliament by the Liberals, Nationals, Labor, the Greens and crossbenchers, like those in the Xenophon team. It is a mean, sneaky and stupid bill. It increases the tax rate on cigars and loose leaf tobacco from its staggeringly high level of $772 per kilogram to the astronomical level currently applying to cigarettes of $882 per kilogram. That tax is the reason Australia has the most expensive smokes in the world.
The bill is mean because cigarette smokers are disproportionately poor and include thousands of Aborigines, unemployed, disabled and other welfare recipients. The tobacco taxes that smokers pay are already at least 17 times the healthcare costs that smokers impose on other taxpayers. The bill is sneaky because the government could just as easily reduce the higher tax rate to the level of the lower rate. There is even a case for maintaining a lower tax rate on cigars, as their use is typically less addictive and harmful than cigarette use.
The bill is also stupid because increasing tobacco tax rates further will prompt faster growth of the untaxed and unregulated black market, so tobacco tax revenue may actually fall. Only today we have seen Customs officials charged regarding an alleged tobacco-smuggling ring. The media and government won't admit the obvious, which is that this is a direct result of extortionate tobacco tax rates. From every aspect this is appalling legislation. I condemn it totally.
I rise to speak on the Excise Tariff Amendment (Tobacco Duty Harmonisation) Bill 2017 and Customs Tariff Amendment (Tobacco Duty Harmonisation) Bill 2017. The government says in the common explanatory memorandum to these two bills that it seeks to harmonise the rates of tax on different tobacco products. The excise bill deals with tobacco products produced in Australia, and the Customs bill deals with products imported into Australia. In effect, these bills deal with 85 per cent of the market—that is, the regulated and legal market. These bills do not deal with the remaining 15 per cent of the market, which KPMG describes as an industry dominated by serious and well-organised crime, which sees the illegal tobacco market as a low-risk, high-profit business.
The Australian Customs and Border Protection Service estimates the duty on tobacco that would have been evaded, but for seizures, to be just over $1 billion in 2015-16. No-one knows how much tobacco, mostly in the form of cigarettes, evaded detection and found its way to the black market. Although it has been illegal to grow tobacco in Australia since 2006, tobacco continues to be grown illegally and sold as chop-chop, and much of this is bought by smokers who roll their own cigarettes. It is a statement of the obvious, but the government receives nothing from the sale of tobacco products in the black market. The central problem is that, as the government increases taxes on legal tobacco, it forces smokers into the black market and this in turn increases the size of the black market.
It is estimated that around 13 per cent of Australians over the age of 18 smoke, but the figures vary throughout Australia. In the ACT 10 per cent of people smoke but it is double in Queensland and Tasmania. As I referred to the black market, I find it quite appalling that the government knows that this is going on. The black market is bringing in quite a lot of cigarettes that are sold on the black market. The fact is that we are not doing enough at Customs and point of entry into this country to inspect the containers to ensure that we don't have illegal cigarettes coming in to this country.
Smokers in Australia need relief from excessive taxation and they need choices like electronic cigarettes. Electronic cigarettes are handheld devices that are said to recreate the feeling of tobacco smoking. It is currently unlawful to sell or to use electronic cigarettes with a nicotine cartridge. This is because nicotine is classified as a schedule 7 dangerous poison under the Commonwealth Poisons Standard. So, while you can buy cigarettes, you cannot buy nicotine electronic cigarettes. It is a question Australians who smoke ask every day, and there is no sensible answer because the government is spending its time raising another $150 million when it already gouges $11.6 billion a year from smokers. Let me repeat that: $11.6 billion a year from those taxpayers who smoke. And these people are taxpayers because they pay taxes on the cigarettes and tobacco.
Why would the government want to ban cigarettes when they are making so much money? I find they are a bunch of hypocrites, Liberal, Labor and the National Party, because the whole thing is that this about a money grab. It's about $11.6 billion a year that they are taking from these people who are addicted to cigarette smoking, who are forced to pay this extra money. I'd like to know whether this money goes into consolidated revenue. Are we really trying to do something to help these people that are addicted to smoking? Is the money going into reducing the cost of nicotine patches, or are we putting the money into checking out the black market? The government are forcing people back to the black market to buy cigarettes there—and who knows where that money goes. So I do not see this government helping whatsoever.
I spoke about electronic cigarettes. We are talking about nicotine. What are cigarettes? Cigarettes are nicotine. So why are we opposing electronic cigarettes when it is known that they can assist people to cut down on their smoking and hopefully get off cigarettes? That's what we are here for. We’re here to make the right decisions for the people out there struggling. Most of these people who are addicted to cigarettes and smoking are the ones who can least afford it. They are so addicted, so they spend their money on a packet of cigarettes, which gives them relief, usually from depression. They may not have work or are trying to live on a minimum wage or a very low hand-out in social security and the last thing they can afford are cigarettes but they are addicted to it. We have to start looking at doing something to help these people get off the nicotine.
There is another thing that I will raise. Why don't we look at the chemicals that the cigarette companies put into the tobacco for the cigarettes? Why don't we look at that? If nicotine or all these other poisons that they put into tobacco so that the cigarette burns longer or faster—or for whatever reason—are factors, why aren't we looking at controlling what the companies put into the cigarettes so that we can help these smokers get off it?
I am not for smoking, but I believe in a fair society and in trying to help these people, instead of gouging them again with higher taxes, which they can least afford. Start showing me policies and legislation that are going to help these people. I see this as a money-making racket from the government—just another way of collecting more taxes. It is unfortunate that the government is not putting forward a bill today that simplifies the regulation of nicotine and electronic cigarettes in Australia and does what is necessary to make safe the capsules that contain the substance in electronic cigarettes.
I will speak further about non-nicotine electronic cigarettes. In South Australia and Western Australia, it is unlawful to sell products that resemble tobacco. In Queensland, New South Wales and the ACT, laws ban the sale of electronic cigarettes to people under the age of 18. The legality of advertising and promoting non-nicotine electronic cigarettes varies throughout Australia. The same situation arises for the use of non-nicotine electronic cigarettes in smoke-free areas. Instead of working out ways to tax smokers more and limit their choices, I want the government to show leadership by harmonising the laws on electronic cigarettes and doing more to reduce the illicit tobacco industry in Australia.
For those people out there who are non-smokers, I have to be honest—I was a smoker, a very passive smoker, but I gave it up in 1995. I don't smoke now, and previously I was just a social smoker. So I see both sides of the coin. I don't encourage my children to smoke at all, but they are adults and they do their own thing. I am not just looking at the health aspect of this but I'm also looking at it from the perspective of what is right. To help people in Australia who are truly addicted to cigarettes, we must do more than tax them to the hilt, thinking that that is the way to get them off cigarettes. It is more of an educational process. It means doing more to help these people. That's what I'll be looking at, and I hope the government will look at it, rather than just raising the taxes again, more and more every year. I can't see people being helped by that at all.
I would like to thank those senators who have contributed to this debate. These bills adjust the method for calculating the per-kilogram rate of excise and excise-equivalent customs duty to ensure roll-your-own tobacco and stick cigarettes receive comparable taxation treatment. The adjustments will increase the duty imposed on roll-your-own tobacco over four years, with the first adjustment occurring on 1 September 2017.
The adjustments will ensure that taxation of tobacco products, whether stick cigarettes or roll-your-own tobacco, receive equivalent tax treatment. In relation to Senator Hanson's point, the government announced additional funding to expand the Tobacco Strike Team and enhance penalties for tobacco offences in the 2016-17 budget. The expansion of the Tobacco Strike Team has taken place, and legislation to implement the enhanced penalties continues to be progressed. I commend the bills to the Senate.